Question 1

What is a limitation of the automated trading system?

Accepted Answer

A)  has potential for system quirks 
B)  generates orders as soon as trade rules are fulfilled 
C)  trades multiple accounts at one time 
D)  Traders can backtest their rules to determine if the result is profitable. 
A)  has potential for system quirks 
B)  generates orders as soon as trade rules are fulfilled 
C)  trades multiple accounts at one time 
D)  Traders can backtest their rules to determine if the result is profitable. A

Question 2

Concerning the foreign exchange market, which of the following is FALSE?

Accepted Answer

A)  Virtually all foreign exchange trading takes place in London and Zurich. 
B)  Foreign exchange trading is dominated by the dollar, euro, yen, and pound. 
C)  Individual households, businesses, governments, and banks buy and sell foreign currencies and other debt instruments. 
D)  The foreign exchange market has no centralized meeting place and no formal requirements for participation. 
A)  Virtually all foreign exchange trading takes place in London and Zurich. 
B)  Foreign exchange trading is dominated by the dollar, euro, yen, and pound. 
C)  Individual households, businesses, governments, and banks buy and sell foreign currencies and other debt instruments. 
D)  The foreign exchange market has no centralized meeting place and no formal requirements for participation. A

Question 3

Which of the following would NOT induce the U.S.demand curve for foreign exchange to shift backward to the left?

Accepted Answer

A)  worsening American tastes for goods produced overseas 
B)  decreasing interest rates in the U.S. compared to those overseas 
C)  a fall in the level of U.S. income 
D)  a depreciation in the U.S. dollar against foreign currencies 
A)  worsening American tastes for goods produced overseas 
B)  decreasing interest rates in the U.S. compared to those overseas 
C)  a fall in the level of U.S. income 
D)  a depreciation in the U.S. dollar against foreign currencies D

Question 4

A corporation dealing in foreign exchange may desire to obtain an exchange quote between the pound and franc, whose values are both expressed relative to the dollar.____ are used to determine such a relationship.

Accepted Answer

A)  Spot exchange rates 
B)  Forward exchange rates 
C)  Cross exchange rates 
D)  Option exchange rates 
A)  Spot exchange rates 
B)  Forward exchange rates 
C)  Cross exchange rates 
D)  Option exchange rates

Question 5

Which trading strategy will lead to profit 100 percent of the time?

Accepted Answer

A)  purchase the euro when the 50-day moving average of the euro crosses the 100-day moving average 
B)  purchase oil when the cost per barrel is $65 
C)  purchase gold when the cost per ounce is $1200 
D)  Losses are part of the game. 
A)  purchase the euro when the 50-day moving average of the euro crosses the 100-day moving average 
B)  purchase oil when the cost per barrel is $65 
C)  purchase gold when the cost per ounce is $1200 
D)  Losses are part of the game.

Question 6

Figure 11.2. Market for Francs
​  
-Refer to Figure 11.2.A shift in the demand for francs from D0 to D1, or a shift in the supply of francs from S0 to S2, would result in a(n)

Accepted Answer

A)  depreciation in the dollar against the franc. 
B)  appreciation in the dollar against the franc. 
C)  unchanged dollar/franc exchange rate. 
D)  depreciation in the franc against the dollar. 
A)  depreciation in the dollar against the franc. 
B)  appreciation in the dollar against the franc. 
C)  unchanged dollar/franc exchange rate. 
D)  depreciation in the franc against the dollar.

Question 7

In the table above, a change in the ______ will result in a movement along the supply schedule of pounds.

Accepted Answer

A)  dollar/pound exchange rate 
B)  rate of interest in the United States 
C)  per-capita income of Americans 
D)  level of technology in the United States 
A)  dollar/pound exchange rate 
B)  rate of interest in the United States 
C)  per-capita income of Americans 
D)  level of technology in the United States

Question 8

During the era of dollar appreciation, in the 1980s, a main reason why the dollar did NOT fall in value was

Accepted Answer

A)  flows of foreign investment into the United States. 
B)  rising price inflation in the United States. 
C)  a substantial decrease in U.S. imports. 
D)  a substantial increase in U.S. exports. 
A)  flows of foreign investment into the United States. 
B)  rising price inflation in the United States. 
C)  a substantial decrease in U.S. imports. 
D)  a substantial increase in U.S. exports.

Question 9

If a Citibank dealer expects the Swiss franc to depreciate in the future, then he will lower bid and offer rates for the franc in order to discourage other dealers from selling francs to Citibank and persuade other dealers to buy francs from Citibank.

Accepted Answer

A) True 
 B)False

Question 10

Which is NOT a bank that trades in the foreign exchange market?

Accepted Answer

A)  Deutsche Bank 
B)  Citigroup 
C)  Barclays 
D)  Charles Schwab 
A)  Deutsche Bank 
B)  Citigroup 
C)  Barclays 
D)  Charles Schwab

Question 11

Most foreign exchange transactions are conducted between commercial banks and household customers.

Accepted Answer

A) True 
 B)False

Question 12

If it takes $1.5515 to buy 1 pound and $0.6845 to buy 1 franc, then it takes 2.27 francs to buy 1 pound.

Accepted Answer

A) True 
 B)False

Question 13

A demand for U.S.dollars would result from

Accepted Answer

A)  an American tourist visiting the British Museum in London. 
B)  a Japanese investor purchasing German securities. 
C)  Honda, a Japanese auto company, buying land in Alabama. 
D)  Airbus, a European firm, selling jetliners to airlines in South Korea. 
A)  an American tourist visiting the British Museum in London. 
B)  a Japanese investor purchasing German securities. 
C)  Honda, a Japanese auto company, buying land in Alabama. 
D)  Airbus, a European firm, selling jetliners to airlines in South Korea.

Question 14

During 2012-2013, currency speculator George Soros made a lucrative currency trade.Having expectations of a future depreciation of the yen, Soros made big bets against it.He sold large amounts of yen, pushed its value down, and profited by re-buying the yen when its price bottomed out.What Soros was engaging in was a

Accepted Answer

A)  long position. 
B)  short position. 
C)  premium position. 
D)  discount position. 
A)  long position. 
B)  short position. 
C)  premium position. 
D)  discount position.

Question 15

The demand for foreign exchange results from transactions that appear on the

Accepted Answer

A)  credit side of a country's balance of payments statement. 
B)  debit side of a country's balance of payments statement. 
C)  both the credit side and the debit side of a country's balance of payments statement. 
D)  neither the credit side nor the debit side of a country balance of payments statement. 
A)  credit side of a country's balance of payments statement. 
B)  debit side of a country's balance of payments statement. 
C)  both the credit side and the debit side of a country's balance of payments statement. 
D)  neither the credit side nor the debit side of a country balance of payments statement.

Question 16

A major difference between the spot market and the forward market is that the spot market deals with

Accepted Answer

A)  the immediate delivery of currencies. 
B)  the merchandise trade account. 
C)  currencies traded for future delivery. 
D)  hedging of international currency risks. 
A)  the immediate delivery of currencies. 
B)  the merchandise trade account. 
C)  currencies traded for future delivery. 
D)  hedging of international currency risks.

Question 17

If the dollar cost of the U.K.pound is $1.50, and the dollar cost of the Swiss franc is $1, then the cross-exchange rate between the pound and the franc is 0.67 francs per pound.

Accepted Answer

A) True 
 B)False

Question 18

Throughout the foreign exchange market, trading in currencies

Accepted Answer

A)  occurs at any hour of the day or night. 
B)  occurs at prices established by the U.S. and British governments. 
C)  is conducted on centralized trading floors in Paris and Hong Kong. 
D)  is restricted to the hours between 1 P.M and 3 P.M., Eastern Time Zone. 
A)  occurs at any hour of the day or night. 
B)  occurs at prices established by the U.S. and British governments. 
C)  is conducted on centralized trading floors in Paris and Hong Kong. 
D)  is restricted to the hours between 1 P.M and 3 P.M., Eastern Time Zone.

Question 19

Concerning foreign exchange trading, the bid rate refers to the price that a bank is willing to pay for a unit of foreign currency; the offer rate is the price at which the bank is willing to sell a unit of foreign currency.

Accepted Answer

A) True 
 B)False

Question 20

An increase in the dollar price of other currencies tends to cause

Accepted Answer

A)  U.S. goods to be cheaper than foreign goods. 
B)  U.S. goods to be more expensive than foreign goods. 
C)  foreign goods to be more expensive to residents of foreign nations. 
D)  foreign goods to be cheaper to residents of the United States. 
A)  U.S. goods to be cheaper than foreign goods. 
B)  U.S. goods to be more expensive than foreign goods. 
C)  foreign goods to be more expensive to residents of foreign nations. 
D)  foreign goods to be cheaper to residents of the United States.

What is a limitation of the automated trading system?

Concerning the foreign exchange market, which of the following is FALSE?

Which of the following would NOT induce the U.S.demand curve for foreign exchange to shift backward to the left?

A corporation dealing in foreign exchange may desire to obtain an exchange quote between the pound and franc, whose values are both expressed relative to the dollar.____ are used to determine such a relationship.

Which trading strategy will lead to profit 100 percent of the time?

Figure 11.2. Market for Francs -Refer to Figure 11.2.A shift in the demand for francs from D₀ to D₁, or a shift in the supply of francs from S₀ to S₂, would result in a(n)

In the table above, a change in the ______ will result in a movement along the supply schedule of pounds.

During the era of dollar appreciation, in the 1980s, a main reason why the dollar did NOT fall in value was

If a Citibank dealer expects the Swiss franc to depreciate in the future, then he will lower bid and offer rates for the franc in order to discourage other dealers from selling francs to Citibank and persuade other dealers to buy francs from Citibank.

Which is NOT a bank that trades in the foreign exchange market?

Most foreign exchange transactions are conducted between commercial banks and household customers.

If it takes $1.5515 to buy 1 pound and $0.6845 to buy 1 franc, then it takes 2.27 francs to buy 1 pound.

A demand for U.S.dollars would result from

The demand for foreign exchange results from transactions that appear on the

A major difference between the spot market and the forward market is that the spot market deals with

If the dollar cost of the U.K.pound is $1.50, and the dollar cost of the Swiss franc is $1, then the cross-exchange rate between the pound and the franc is 0.67 francs per pound.

Throughout the foreign exchange market, trading in currencies

Concerning foreign exchange trading, the bid rate refers to the price that a bank is willing to pay for a unit of foreign currency; the offer rate is the price at which the bank is willing to sell a unit of foreign currency.

An increase in the dollar price of other currencies tends to cause

The International Economy and Globalization

Foundations of Modern Trade Theory Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Adjustments and the Balance of Payments

Exchange Rate Systems and Currency Crises

Filters

Exam 11: Foreign Exchange

What is a limitation of the automated trading system?

Concerning the foreign exchange market, which of the following is FALSE?

Which of the following would NOT induce the U.S.demand curve for foreign exchange to shift backward to the left?

A corporation dealing in foreign exchange may desire to obtain an exchange quote between the pound and franc, whose values are both expressed relative to the dollar.____ are used to determine such a relationship.

Which trading strategy will lead to profit 100 percent of the time?

Figure 11.2. Market for Francs ​ -Refer to Figure 11.2.A shift in the demand for francs from D0 to D1, or a shift in the supply of francs from S0 to S2, would result in a(n)

In the table above, a change in the ______ will result in a movement along the supply schedule of pounds.

During the era of dollar appreciation, in the 1980s, a main reason why the dollar did NOT fall in value was

If a Citibank dealer expects the Swiss franc to depreciate in the future, then he will lower bid and offer rates for the franc in order to discourage other dealers from selling francs to Citibank and persuade other dealers to buy francs from Citibank.

Which is NOT a bank that trades in the foreign exchange market?

Most foreign exchange transactions are conducted between commercial banks and household customers.

If it takes $1.5515 to buy 1 pound and $0.6845 to buy 1 franc, then it takes 2.27 francs to buy 1 pound.

A demand for U.S.dollars would result from

The demand for foreign exchange results from transactions that appear on the

A major difference between the spot market and the forward market is that the spot market deals with

If the dollar cost of the U.K.pound is $1.50, and the dollar cost of the Swiss franc is $1, then the cross-exchange rate between the pound and the franc is 0.67 francs per pound.

Throughout the foreign exchange market, trading in currencies

Concerning foreign exchange trading, the bid rate refers to the price that a bank is willing to pay for a unit of foreign currency; the offer rate is the price at which the bank is willing to sell a unit of foreign currency.

An increase in the dollar price of other currencies tends to cause

The International Economy and Globalization

Foundations of Modern Trade Theory Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Adjustments and the Balance of Payments

Exchange Rate Systems and Currency Crises

Filters

Figure 11.2. Market for Francs -Refer to Figure 11.2.A shift in the demand for francs from D₀ to D₁, or a shift in the supply of francs from S₀ to S₂, would result in a(n)